Understanding your mortgage payment

Understanding the difference in your monthly payments is crucial. By not over leveraging yourself when you make your purchase or obtain a refinance allows you to access smaller amortization periods, bi-weekly payments and percentage increased pre-payments to save HUGE on unnecessary interest expense.

The following is a breakdown that shows you the significant difference in payments. Please use this knowledge to properly structure your mortgage payment with us.

We are using the average Greater Vancouver mortgage of $330,000 with an interest rate of 4% (irrelevant example):

25 Years

Payment TermsPayment AmountInterest Paid over 25 YearsBalance after 5 Years
Monthly$737.87$90,759.36$287,277.69
Bi-Weekly$867.94$63,756.66$277,583.67

30 Years

Payment TermsPayment AmountInterest Paid over 30 YearsBalance after 5 Years
Monthly$569.21$234,916.99$298,317.91
Bi-Weekly$784.61$97,902.57$289,554.52
(Please note that the bi-weekly payment is accelerated and paid every 14 days.)

As you can see, the bi-weekly mortgage payment is hands down the best way to go. You save $10,000 by using a bi-weekly payment in this example. Now lets take a look to see what would happen if you simply increased your bi-weekly payment by only 10%:

25 Years

Payment TermsPayment AmountInterest Paid over 25 YearsBalance after 5 Years
Bi-Weekly$954.94$39,072.07$265,085.69

30 Years

Payment TermsPayment AmountInterest Paid over 27 YearsBalance After 5 Years
Bi-Weekly$862.61$65,569.63$278,349.39

A simple 10% increase on a bi-weekly payment with 25 year amortization just saved almost $25,000! I don’t mean to bore you with numbers but just wanted to show you the power of not over-leveraging yourself.

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Remember to Own Your Life and have a nice day!

Best Regards,

Jessi Johnson

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